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How Green Are You?

There are three categories of ‘green’ currently used to
describe attitudes to investment by fund managers. These are:

Light green funds - Light
green funds follow the best of sector approach by investing in the top
200 UK (and EEC) companies and similar sized ones in Europe and in North America.There
is very limited exposure to the Far East and emerging markets. Funds can
include investments in oil, pharmaceuticals and banks, but not tobacco,
environmental exploitation, armaments, animal testing nor companies with
poor human rights records. Light green funds aim to mirror the weightings
in the conventional investment market.

Medium green funds - Medium
green funds apply stricter criteria than light green, but still allow
some exposure to oil, banks and pharmaceuticals. Investments are drawn
from the UK (and EEC) All Share Index with some exposure to the FTSE 100, and the
bulk of investments come from the Mid 250 and the Smaller Company Index.
Again similar sized companies are selected mainly from Europe and North
America, with a little exposure in other markets.

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Explaination

Inevitably dark green investors narrow their investment choice because
of the strictness of their ethical criteria. Light green investors tend
to be less concerned about avoiding investments, preferring to take a more
balanced 'best of sector' approach.

So, for instance, a traditional dark green investment would exclude oil
and gas companies from an ethical portfolio. Light greens would say that
complete avoidance of these areas misses both environmental and financial
opportunities and that a strategy of investing in and encouraging best practice
is in the interest of consumers, companies and the environment.

Some global companies provide stark illustrations of these contradictions
due to the scale of their operations. BP, for instance, has been heavily
criticised for some of its human rights and environmental activities but
it now lists among its divisions the world's largest solar energy company.